Chinese soybean imports fell to a two-year low in November according to the data from the General Administration of Customs. Imports came in at 5.38mt, down 38% year-on-year and 22.2% lower than October.
The decline in Chinese imports is mainly attributed to the ongoing trade-war with the U.S. After tariffs were imposed in June, China rendered Brazil its main soy supplier. That led the US Gulf-Paranagua soybean price spread to surge to a peak of USD 98.3 per tonne in early October.
However, spreads have been narrowing since then, partly due to softening demand, partly due to the destocking currently taking place and partly due to the expectations of a resolution in trade tensions. As on Monday 10th December, the price differential between US Gulf and Paranagua soybeans stood at USD 20.2 per tonne, close to pre-tariff levels.
It remains to be seen how Chinese buyers will react going forward. President Xi and Trump agreed on a 90-day trade truce during the latest G20 meeting earlier this month. Will it translate into fresh soy cargoes moving to China? Or will Chinese mills opt for South American beans? In the meantime, Argentina is primed for a comeback in the soy market after a drought destroyed its last crop. Brazil is set for another record crop and is expected to begin its harvest this month, weeks earlier than usual thanks to favourable weather in various parts of the country.
Source:XINDE MARINE NEWS
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